Investor Real Estate: Backlogs are Clearing On Single-Family Rentals

The Blackstone Group is now the largest investor in the US of single family rental homes. The private-equity firm has purchased more than 6,500 foreclosed homes this year in eight metro areas. Investors play a significant role in determining the prices and health of a real estate market. Investors have recently been taking advantage of lower home prices in the last few years raising $6-8 billion in purchasing single family homes alone.

“Of course, success is by no means assured for private-equity firms, especially given their high targets for investment returns in general and their lack of experience with this type of real estate,” a recent article at The Wall Street Journal notes. “Used to buying office buildings, shopping centers and other big properties, they may struggle to find economies of scale in managing thousands of individual homes in neighborhoods that were hard-hit by foreclosures, but are showing signs of price stabilization.”

Projection from this side of real estate is price appreciation at the low end of the market meaning lower cash yields.